TORNILLO INDEPENDENT SCHOOL DISTRICT

Transcription

1 TORNILLO INDEPENDENT SCHOOL DISTRICT Annual Financial Report FOR THE YEAR ENDED AUGUST 31, 2014

2 ANNUAL FINANCIAL AND COMPLIANCE REPORTS FOR THE YEAR ENDED AUGUST 31, 2014

3 ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED AUGUST 31, 2014 TABLE OF CONTENTS Page Exhibit Certificate of Board... 1 FINANCIAL SECTION Independent Auditor's Report... 5 Management s Discussion and Analysis... 9 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position A-1 Statement of Activities B-1 Governmental Fund Financial Statements Balance Sheet Governmental Funds C-1 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position C-2 Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds C-3 Reconciliation of the Governmental Funds C-4 Proprietary Fund Financial Statements Statement of Net Position D-1 Statement of Revenues, Expenses, and Changes in Fund Net Position D-2 Statement of Cash Flows D-3 Fiduciary Fund Financial Statements Statement of Fiduciary Net Position E-1 Statement of Changes in Fiduciary Net Position E-2 Notes to the Financial Statements Required Supplementary Information Statement of Revenues, Expenditures, and Changes in Fund Balance Budgetary and Actual - General Fund G-1 Other Supplementary Information Nonmajor Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds H-1 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances H-2 Fiduciary Funds Combining Statement of Net Position - Agency Funds H-3 Combining Statement of Net Position - Private Purpose Trust Fund H-4 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Private Purpose Trust Fund H-5

4 TABLE OF CONTENTS (Continued) Page Exhibit Required TEA Schedules Schedule of Delinquent Taxes Receivable J-1 Budgetary Comparison Schedule - Nonmajor Child Nutrition Fund J-2 Budgetary Comparison Schedule - Debt Service Fund J-3 FEDERAL AWARDS SECTION Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor s Report on Compliance for Each Major Program and Internal Control over Compliance Required by OMB Circular A Schedule of Findings and Questioned Costs Schedule of Status of Prior Findings Corrective Action Plan Schedule of Expenditures of Federal Awards K-1 Notes on Accounting Policies for Federal Awards... 99

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7 FINANCIAL SECTION 3

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10 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the District, as of August 31, 2014, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter Change in Accounting Principle As described in Note I to the financial statements, in 2014, the District adopted new accounting guidance, GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information on pages 9 through 18 and 65 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Tornillo Independent School District's basic financial statements. The combining and individual nonmajor fund financial statements, and the required TEA schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organization, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements 6

11 and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The required TEA schedules have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 20, 2015, on our consideration of Tornillo Independent School District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Tornillo Independent School District s internal control over financial reporting and compliance. Gibson, Ruddock, Patterson LLC El Paso, Texas January 20, 2015 F:\DATA\Tornillo Independent School\ AFS.wpd 7

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13 MANAGEMENT S DISCUSSION AND ANALYSIS 9

14 MANAGEMENT S DISCUSSION AND ANALYSIS In this section of the Annual Financial and Compliance Report, we the managers of Tornillo Independent School District, discuss and analyze the District s financial performance for the fiscal year ended August 31, Please read it in conjunction with the District s financial statements, which follow this section. USING THIS REPORT This annual report consists of a series of financial statements. The government-wide financial statements include the Statement of Net Position and the Statement of Activities, which provide information about the activities of the District as a whole and present a longer-term view of the District s property and debt obligations and other financial matters. They reflect the flow of total economic resources in a manner similar to the financial reports of a business enterprise. Fund Financial statements report the District s operations in more detail than the governmentwide statements by providing information about the District s most significant funds. For governmental activities, these statements tell how services were financed in the short term as well as what resources remain for future spending. They reflect the flow of current financial resources, and supply the basis for tax levies and the appropriations budget. For proprietary activities, fund financial statements tell how goods or services of the District were sold to departments within the District or to external customers and how the sales revenues covered the expenses of the goods or services. The remaining statements, fiduciary statements, provide financial information about the activities for which the District acts solely as a trustee or agent for the benefit of those outside of the district. The notes to the financial statement provide narrative explanations or additional data needed for full disclosure in the government-wide statements or the fund financial statements. The combining statements for non-major funds contain even more information about the District s individual funds. These are not required by TEA. The sections labeled TEA Required Schedules and Federal Awards Section contain data used by monitoring or regulatory agencies for assurance that the District is using funds in compliance with the terms of grants. Reporting the District as a Whole The Statement of Net Position and the Statement of Activities The primary purpose of the analysis of the District s overall financial condition and operations is to show whether the District is better off or worse off as a result of the year s activities. The Statement of Net Position includes all the District s assets and liabilities at the end of the year while the Statement of Activities includes all the revenues and expenses generated by the District s operations during the year. These apply the accrual basis of accounting which is the basis used by private sector companies. All of the current year s revenues and expenses are taken into account regardless of when cash is 10

15 received or paid. The District s revenues are divided into those provided by outside parties who share the costs of some programs, such as tuition received from students from outside the District and grants provided by the U.S. Department of Education to assist children with disabilities from disadvantaged backgrounds (program revenues), and revenues provided by the taxpayers or by TEA in equalization funding processes (general revenues). All the District s assets are reported whether they serve the current year or future years. Liabilities are considered regardless of whether they must be paid in the current or future years. These two statements report the District s net position and changes in them. The District s net position (the difference between assets and liabilities) provide one measure of the District s financial health, or financial position. Over time, increases or decreases in the District s net position are one indicator of whether its financial health is improving or deteriorating. To fully assess the overall health of the District, however, you should consider non-financial factors as well, such as changes in the District s average daily attendance or its property tax base and the condition of the District s facilities. Governmental activities- Most of the District s basic services are reported here, including the instruction, counseling, co-curricular activities, food services, transportation, maintenance, community services, and general administration. Property taxes, tuition, fees, and state and federal grants finance most of these activities. Reporting the District s Most Significant Funds Fund Financial Statements The fund financial statements provide detailed information about the most significant funds, not the District as a whole. Laws and contracts require the District to establish some funds, such as grants received under the No Child Left Behind Act from the U.S. Department of Education. The District s administration establishes many other funds to help it control and manage money for particular purposes (like campus activities). The District s Governmental funds use the following accounting approach: Governmental funds - All of the District s basic services are reported in governmental funds. These use modified accrual accounting (a method that measures the receipt and disbursement of cash and all other financial assets that can be readily converted to cash) and report balances that are available for future spending. The governmental fund statements provide a detailed shortterm view of the District s general operations and the basic services it provides. We describe the differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds in reconciliation schedules following each of the fund financial statements. 11

16 The District as Trustee Reporting the District s Fiduciary Responsibilities The District is the trustee, or fiduciary, for money raised by student activities and alumnae scholarship programs. All of the District s fiduciary activities are reported in separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position. We exclude these resources from the District s other financial statements because the District cannot use these assets to finance its operations. The District is only responsible for ensuring that the assets reported in these funds are used for their intended purposes. FINANCIAL HIGHLIGHTS Total assets and total deferred outflows and resources of the Tornillo Independent School District exceeded its liabilities for fiscal year 2014 by $17,472,694 (net position). Of this amount, $5,727,721 (unrestricted net position) may be used to meet the District's ongoing obligations to creditors and residents. Total Net Position of the District increased from $15.9 million in fiscal year 2013 to $17.4 million at year-end Of this total amount, unrestricted increased by $1,581,999 from $4,145,723 to $5,727,721. Total revenues increased $1,305,262 from $13,782,230 in fiscal year 2013, to $15,087,492 in fiscal year Total expenses increased $385,187 from $12,897,414 to $13,282,601. The District's governmental funds financial statements reported a combined ending fund balance in fiscal year 2014 of $6.8 million. The combined ending fund balance of the District increased $1,079,432 million from $5.7 million in fiscal year Of this total amount, $9,493 is Nonspendable, $1,271,394 is Restricted, $871,441 is Committed, 1,000,000 is assigned and $3,651,053 is Unassigned and is available for spending at the District's discretion. The fund balance in the Debt Service Fund is $244,022. The Interest and Sinking tax rate for fiscal year 2014 remained the same from year for Maintenance and Operations and.2136 for Debt Service. A combined total of per 100 valuation. On April 2013, The Department of Agriculture approved a plan to reduce the excessive operating fund balance for the food service department. The fund balance reduction allowed for the construction of The High School Cafeteria addition including the purchase of cafeteria equipment. As of Fiscal Year 2014 the High School Cafeteria is fully operational. During Fiscal Year , Tornillo ISD purchased two new school buses. This was made possible due to a Texas Department of Transportation grant. The amount of funds received was $159,040. On May 24, 2013 the Board of Trustees voted to commit $900,000 for district-wide construction and improvements and $100,000 for litigation purposes. As of August 31, 2014 the construction and related expenditures total 97,209. The District has finished the design phase of the 12

17 construction of the High School Classrooms and construction is expected to start in the next couple of months with an estimated time of completion of nine to twelve months. The Superintendent assigned $100,000 to the construction of the High School cafeteria in fiscal year There was no need for the District to spend any of the assigned funds assigned by the Superintendent for the cafeteria project. An additional $900,000 was assigned in fiscal year 2014 for several construction and improvements projects to be completed in fiscal year Government-Wide Financial Analysis Our analysis of comparative balances and changes therein compares both current and prior year data and discuss significant changes in the accounts. Our analysis focuses on the net position (Table I) and changes in net position (Table II) of the District s governmental and business-type activities. Net position of the District increased from $15.9 million to $17.4 million. Unrestricted net position, the part of net position that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements, were $5.7 million at August 31, The increase in governmental net position was the result of several factors. While local revenue remained somewhat constant, the District received increases in state and federal revenue support. Table I The District s Net Position (in thousands) Governmental & Other Business-Type Activities Current and Other Assets $ 6880 $8,127 Non-Current Assets 22,644 22,750 Deferred Outflows of Resources Current Liabilities 696 1,143 Long Term Liabilities 12,869 13,010 Total Liabilities 13,565 14,153 Net Position: Invested in capital assets net of related debt 10,063 10,485 Restricted 1,751 1,260 Unrestricted* 4,146 5,728 Total Net Position $ 15,960 $17,473 *Includes $29 and $27 of business-type activities for 2013 and 2014, respectively. 13

18 Changes in Net Position The District s total revenues were $15.1 million. A significant portion, 68 percent, of the district s revenues comes from state aid formula grants. Approximately 5 percent comes from taxes. The remaining 27 percent comes from investment earnings, federal grants and miscellaneous revenue services. (See figure A-1 below.) Figure A-1 Sources of Revenues for Fiscal Year

19 Table II Changes In Net Position (in thousands) Governmental & Other Business-Type Activities Revenues: Program Revenues: Charges for Services * $ 77 $ 83 Operating Grants and Contributions 3,110 3,975 General Revenues: Maintenance & Operations Taxes Debt Service Taxes State Aid-Formula Grants 9,798 10,196 Grants and Contributions not Restricted to specific functions Investment Earnings 14 7 Miscellaneous Special Item - Litigation Settlement - Total Revenues 13,782 15,087 _ Expenses: Instruction, curriculum and Media services 6,870 7,256 Instructional and school leadership Student support services Food Services Co-curricular activities General Administration Plant maintenance, security, and data processing 1,809 1,899 Community services Debt service Other Intergovernmental Charges 9 12 Facilities acquisition and construction Payments to fiscal agent/member district Other business-type activities Total Expenses 12,897 13,283 Increase in net position 885 1,804 Beginning net position 15,075 15,960 Prior Period Adjustment - (292) Ending net position $ 15,960 $ 17,472 *Includes $2 and $1 of business-type activities for 2013 and 2014, respectively. 15

20 The total cost of all programs and services was $13.2 million. Fifty-Five percent of these costs were for instructional student services. Six percent for all programs and services cost was for instructional and school leadership and fourteen percent was for plant maintenance, security and data processing services. THE DISTRICT S FUNDS As the District completed the year, its governmental funds reported combined fund balances of $6.8 million, which is above last year s total of $5.7 million. Included in this year s total change is an increase of $838K in the District s General Fund. The General Fund s gained due to the excess of revenues over expenditures compared to last year. In fiscal year 2014, the District implemented GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. As a result of the implementation, a new category in the Statement of Net Position, Deferred Outflows of Resources, is now reflected. In previous years, this item was shown as a reduction of long-term liabilities.. 16

21 CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At the end of 2014, the District had $22,750,643 invested in a broad range of capital assets including landscaping projects at the different campuses, improvements to the Intermediate Annex, and the addition of the High School Cafeteria. The District also acquired two school buses. This was made possible through the availability of a federal grant. Debt At year-end, the District had $11.4 million in bonds outstanding versus $11.7 million last year. ECONOMIC FACTORS AND NEXT YEAR S BUDGET AND RATES The District s student population continues to show a slight increase over previous years. possibly due to people fleeing the drug-related violence in Mexico. Many of the community s citizens commute 30 miles to the border city of El Paso for their employment. Due to astute planning of unexpected growth; should it occur.. Construction is completed and there is plenty of space for expansion; should it be needed. Our Board always adopts its budget using a conservative growth estimate in ADA. We maintain the local Maintenance & Operations tax rate at $1.09 in order to maximize the Tier II State Funding. Tornillo ISD currently qualifies for 90% funding by the state for its debt service obligations; with the remaining 10% satisfied through the District s Debt Service Taxes. It has long been the Board s objective to maintain a significant fund balance to make new construction, and/or renovations to existing structures, possible should the need arise. The District continues to apply for and qualify for various Federal Program Grants that assist in the enhancement of education for students identified with special needs. These funds constitute a significant portion of our operating budget. BUDGETARY HIGHLIGHTS GASB Statement 34 required that we provide a discussion on significant variances between the district s original budget, final budget, and actual expenditures, and the impact of these variances on the District s/department s future liquidity. Paragraph 11e of GASB Statement No. 34 General Fund. The FY 2014 budget was developed by balancing challenges of an increase in operational cost and maintaining an adequate fund balance reserve to ensure financial stability. The most significant fund for the District is the General Fund, funded primarily through state aide and property tax revenue. Over the course of the year, the District approved several budget amendments. Budget amendments that increase or decrease the amount in a function are presented to the Tornillo ISD 17

22 Board of Trustees for approval. Two significant amendments approved during the year were to function 35/Food Service and Function 81/Facilities Acquisition and Construction. Originally, all of the expenditures related to the High School cafeteria addition were coded to function 35. After further consideration, administration reclassified the expenditures to function 81. As per the Financial Accountability Resource Guide, these expenditures should be classified in function 81. Exhibit G-1 of the financial statements includes a Statement of Revenues, Expenditures, and Changes in Fund Balance report that compares original and final budget amounts to actual amounts as of year-end close. The final column of the report lists of the variance as compared to the final budget. At the end of the fiscal year, the District s actual revenues exceeded projected revenues by $391,612. The District s expenditures as compared to the final budget include several significant variances. There are three functions listed on the report that contain a significant variance as identified by the District. The functions and variances are as follows: Function 34/Student Pupil Transportation Actual expenditures were $212,385 less than the final budgeted amount of $539,584. The difference is due to the District not purchasing a special education bus during Fiscal Year 2014 as it was originally planned. Also, payroll expenditures decreased due to vacancies. Function 51/Facilities Maintenance and Operations Actual expenditures were $125,993 less than the final budgeted amount of $1,627,219. There was a re-evaluation in the area of procurement of all maintenance and custodial supplies which resulted in a significant decline of prices thus, resulting in savings for the District. Furthermore, the cost of propane was not as high as it was expected. Function 53/Data Processing Services Actual expenditures were $147,624 less than final budgeted amount of $457,913. The District continues to receive E-RATE funding for technology related expenditures. Payroll costs declined due to vacancies in the Technology Department and the Technology Stipend was eliminated. All functions within the approved budget did not exceed the approved appropriation. The significant variances listed above will not significantly impact future services or liquidity. CONTACTING THE DISTRICT S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the District s finances and to show the District s accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the District s business office, at Tornillo Independent School District, Cobb Avenue, Tornillo, Texas. 18

23 BASIC FINANCIAL STATEMENTS 19

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25 STATEMENT OF NET POSITION AUGUST 31, 2014 EXHIBIT A-1 Data Control Codes Governmental Activities Primary Government Business Type Activities ASSETS 1110 Cash and Cash Equivalents $ 6,995,022 $ 2,490 $ 6,997, Property Taxes Receivable (Delinquent) 203, , Allowance for Uncollectible Taxes (10,195) - (10,195) 1240 Due from Other Governments 887, , Internal Balances (24,150) 24, Other Receivables, net 11,212-11, Inventories 12,966-12, Prepayments 23,544-23,544 Capital Assets: 1510 Land 7,243-7, Buildings, Net 22,059,260-22,059, Furniture and Equipment, Net 626, , Library Books and Media, Net 26,165-26, Construction in Progress 31,185-31, Total Assets 30,850,935 26,640 30,877,575 DEFERRED O UTFLO WS O F RESO URCES 1701 Deferred Charge for Refunding Total 749, , Total Deferred Outflows of Resources 749, ,090 LIABILITIES 2110 Accounts Payable 2140 Interest Payable 2150 Payroll Deductions & Withholdings 2160 Accrued Wages Payable 2177 Due to Fiduciary Funds 2180 Due to Other Governments 2200 Accrued Expenses 2300 Unearned Revenue Noncurrent Liabilities 2501 Due Within One Year 2502 Due in More Than One Year 90,793-90,793 56,814-56,814 89,642-89, , , ,748-13,748 11,071-11, , , , ,000 12,395,473-12,395, Total Liabilities 14,153,971-14,153,971 NET PO SITIO N 3200 Net Investment in Capital Assets Restricted for: 3820 Restricted for Federal and State Programs 3850 Restricted for Debt Service 3870 Restricted for Campus Activities 3900 Unrestricted 10,484,992-10,484, , , , ,296 9,909-9,909 5,701,081 26,640 5,727, Total Net Position $ 17,446,054 $ 26,640 $ 17,472,694 The notes to the financial statements are an integral part of this statement. 21

26 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31, 2014 Data Control Codes Primary Government: 1 Expenses 3 Charges for Services Program Revenues 4 Operating Grants and Contributions GOVERNMENTAL ACTIVITIES: 11 Instruction $ 6,856,679 $ 561 $ 1,221, Instructional Resources and Media Services 201,273-45, Curriculum and Staff Development 198, , Instructional Leadership 204, , School Leadership 579,673-38, Guidance, Counseling and Evaluation Services 122,238-6, Health Services 81,890-4, Student (Pupil) Transportation 574, , Food Services 863,217 70, , Extracurricular Activities 320,995 7, General Administration 845,856 3,084 78, Facilities Maintenance and Operations 1,450,798 1,177 34, Security and Monitoring Services 136,704-7, Data Processing Services 311, , Community Services 107,627-75, Debt Service - Interest on Long Term Debt 366, , Debt Service - Bond Issuance Cost and Fees 44, Other Intergovernmental Charges 12, [TG] Total Governmental Activities: BUSINESS-TYPE ACTIVITIES: 01 Enterprise Funds - Locally Defined [TB] Total Business-Type Activities: 13,279,798 83,178 3,974,924 2, , [TP] TOTAL PRIMARY GOVERNMENT: $ 13,282,601 $ 83,179 $ 3,974,924 Data Control Codes MT DT SF IE MI TR General Revenues: Taxes: Property Taxes, Levied for General Purposes Property Taxes, Levied for Debt Service State Aid - Formula Grants Investment Earnings Miscellaneous Local and Intermediate Revenue Total General Revenues CN NB PA NE Change in Net Position Net Position - Beginning Prior Period Adjustment Net Position - Ending The notes to the financial statements are an integral part of this statement. 22

27 EXHIBIT B-1 Governmental Activities Net (Expense) Revenue and Changes in Net Position Primary Government Business-type Activities Total $ (5,634,674) $ - $ (5,634,674) (155,532) - (155,532) (22,091) - (22,091) (65,020) - (65,020) (540,702) - (540,702) (115,284) - (115,284) (77,683) - (77,683) (403,335) - (403,335) 178, ,895 (313,575) - (313,575) (764,025) - (764,025) (1,414,913) - (1,414,913) (129,655) - (129,655) (300,958) - (300,958) (32,104) - (32,104) 625, ,603 (44,468) - (44,468) (12,175) - (12,175) (9,221,696) - (9,221,696) - (2,802) (2,802) - (2,802) (2,802) (9,221,696) (2,802) (9,224,498) 673, , , ,364 10,196,115-10,196,115 6,556-6,556 23,765-23,765 11,029,389-11,029,389 $ 1,807,693 15,930,452 (292,091) 17,446,054 $ (2,802) 29,442-1,804,891 15,959,894 (292,091) 26,640 $ 17,472,694 23

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29 GOVERNMENTAL FUND FINANCIAL STATEMENTS 25

30 BALANCE SHEET GOVERNMENTAL FUNDS AUGUST 31, 2014 EXHIBIT C-1 Data Control Codes 10 General Fund 50 Debt Service Fund Other Funds Total Governmental Funds ASSETS 1110 Cash and Cash Equivalents $ 6,763,363 $ 231,658 $ 1 $ 6,995, Property Taxes - Delinquent 164,888 39, , Allowance for Uncollectible Taxes (Credit) (8,244) (1,951) - (10,195) 1240 Receivables from Other Governments 324, , , Due from Other Funds 1,047, , ,748 1,463, Other Receivables 11, , Inventories 12, , Total Assets $ 8,316,555 $ 577,845 $ 669,824 $ 9,564,224 LIABILITIES 2110 Accounts Payable $ 85,221 $ - $ 5,570 $ 90, Payroll Deductions and Withholdings Payable 77,154-12,488 89, Accrued Wages Payable 228,261-28, , Due to Other Funds 945, ,183 1,487, Due to Other Governments 13,748 13, Accrued Expenditures 11, , Unearned Revenues 311, ,913 14, , Total Liabilities 1,659, , ,232 2,574,158 DEFERRED INFLOWS OF RESOURCES 2601 Unavailable Revenue - Property Taxes 150,775 35, , Total Deferred Inflows of Resources 150,775 35, , FUND BALANCES Nonspendable Fund Balance: Inventories Restricted Fund Balance: Federal or State Funds Grant Restriction Retirement of Long-Term Debt Other Restricted Fund Balance Committed Fund Balance: Construction Claims and Judgements Assigned Fund Balance: Construction Unassigned Fund Balance 9, , ,334-45, , , , ,202 11,509 11, , ,791 68, ,650 1,000, ,000,000 3,655,319 - (4,266) 3,651, Total Fund Balances 6,506, ,022 52,592 6,803, Total Liabilities, Deferred Inflows & Fund Balances $ 8,316,555 $ 577,845 $ 669,824 $ 9,564,224 The notes to the financial statements are an integral part of this statement. 26

31 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION AUGUST 31, 2014 EXHIBIT C-2 Total Fund Balances - Governmental Funds 1 The District uses internal service funds to charge the costs of certain activities, such as self-insurance and printing, to appropriate functions in other funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. The net effect of this consolidation is to increase(decrease) net position. 2 Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. At the beginning of the year, the cost of these assets was $31,559,472 and the accumulated depreciation was $8,915,596. In addition, long-term liabilities, including bonds payable, are not due and payable in the current period, and, therefore are not reported as liabilities in the funds. The net effect of including the beginning balances for capital assets (net of depreciation) and long-term debt in the governmental activities is to increase net position. 3 Current year capital outlays and long-term debt principal payments are expenditures in the fund financial statements,but they should be shown as increases in capital assets and reductions in long-term debt in the government-wide financial statements. The net effect of including the 2014 capital outlays and debt principal payments is to increase net position. 4 GASB 65 requires that we write off unamortized debt issuance costs from prior periods. The net effect is to decrease net position. 5 The 2014 depreciation expense increases accumulated depreciation. The net effect of the current year's depreciation is to decrease net position. 6 Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing unavailable revenue from property taxes as revenue, eliminating interfund transactions, reclassifying the proceeds of bond sales as an increase in bonds payable, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and recognitions is to increase net position. 19 Net Position of Governmental Activities $ $ 6,803,381-10,039,347 1,500,525 (292,091) (784,210) 179,102 17,446,054 The notes to the financial statements are an integral part of this statement. 27

32 Data Control Codes STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED AUGUST 31, General Fund 50 Debt Service Fund Other Funds EXHIBIT C-3 Total Governmental Funds REVENUES: Total Local and Intermediate Sources $ 763,293 $ 132,610 $ 1,020 $ 896,923 State Program Revenues 10,613, ,954 25,987 11,631,006 Federal Program Revenues 952,320-1,587,713 2,540, Total Revenues 12,328,678 1,124,564 1,614,720 15,067,962 EXPENDITURES: Current: 0011 Instruction 0012 Instructional Resources and Media Services 0013 Curriculum and Instructional Staff Development 0021 Instructional Leadership 0023 School Leadership 0031 Guidance, Counseling and Evaluation Services 0033 Health Services 0034 Student (Pupil) Transportation 0035 Food Services 0036 Extracurricular Activities 0041 General Administration 0051 Facilities Maintenance and Operations 0052 Security and Monitoring Services 0053 Data Processing Services 0061 Community Services Debt Service: 0071 Principal on Long Term Debt 0072 Interest on Long Term Debt 0073 Bond Issuance Cost and Fees Capital Outlay: 0081 Facilities Acquisition and Construction Intergovernmental: 0099 Other Intergovernmental Charges 5,396, ,765 6,349, ,322-38, ,913 22, , ,595 63, , , ,137-4, , , ,647 79, , , , , ,348-27, , , , , ,447 1,501, ,501, , , , ,289 29,661-75, ,975 68, , ,083 27, , , , ,924 12, , Total Expenditures 11,490, ,895 1,573,419 13,988, Net Change in Fund Balances 838, ,669 41,301 1,079, Fund Balance - September 1 (Beginning) 5,668,305 44,353 11,291 5,723, Fund Balance - August 31 (Ending) $ 6,506,767 $ 244,022 $ 52,592 $ 6,803,381 The notes to the financial statements are an integral part of this statement. 28

33 EXHIBIT C-4 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED AUGUST 31, 2014 Total Net Change in Fund Balances - Governmental Funds The District uses internal service funds to charge the costs of certain activities, such as self-insurance and printing, to appropriate functions in other funds. The net income (loss) of internal service funds are reported with governmental activities. The net effect of this consolidation is to increase (decrease) net position. $ 1,079,432 - Current year capital outlays and long-term debt principal payments are expenditures in the fund financial statements, but they should be shown as increases in capital assets and reductions in long-term debt in the government-wide financial statements. The net effect of removing the 2014 capital outlays and debt principal payments is to increase net position. Depreciation is not recognized as an expense in governmental funds since it does not require the use of current financial resources. The net effect of the current year's depreciation is to decrease net position. Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing unavailable revenue from property taxes as revenue, adjusting current year revenue to show the revenue earned from the current year's tax levy, eliminating interfund transactions, reclassifying the proceeds of bond sales, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and recognitions is to increase net position. Change in Net Position of Governmental Activities $ 1,500,525 (784,210) 11,946 1,807,693 The notes to the financial statements are an integral part of this statement. 29

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35 PROPRIETARY FUND FINANCIAL STATEMENTS 31

36 STATEMENT OF NET POSITION PROPRIETARY FUNDS AUGUST 31, 2014 EXHIBIT D-1 ASSETS Current Assets: Cash and Cash Equivalents $ Due from Other Funds Business-Type Activities Total Enterprise Funds 2,490 24,150 Total Assets 26,640 NET POSITION Unrestricted Net Position 26,640 Total Net Position $ 26,640 The notes to the financial statements are an integral part of this statement. 32

37 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED AUGUST 31, 2014 EXHIBIT D-2 OPERATING REVENUES: Local and Intermediate Sources $ Business-Type Activities Total Enterprise Funds Total Operating Revenues 1 OPERATING EXPENSES: Other Operating Costs Total Operating Expenses 2, ,803 Operating Income (Loss) Total Net Position - September 1 (Beginning) (2,802) 29,442 Total Net Position - August 31 (Ending) $ 26,640 The notes to the financial statements are an integral part of this statement. 33

38 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED AUGUST 31, 2014 EXHIBIT D-3 Business-Type Activities Total Enterprise Funds Cash Flows from Operating Activities: Cash Received from User Charges $ Cash Payments for Other Operating Expenses Net Cash Used for Operating Activities 1 (2,803) (2,802) Net Decrease in Cash and Cash Equivalents (2,802) Cash and Cash Equivalents at Beginning of Year 5,292 Cash and Cash Equivalents at End of Year $ 2,490 Reconciliation of Operating Income (Loss) to Net Cash Provided By (Used For) Operating Activities: Operating Income (Loss): $ (2,802) The notes to the financial statements are an integral part of this statement. 34

39 FIDUCIARY FUND FINANCIAL STATEMENTS 35

40 STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS AUGUST 31, 2014 EXHIBIT E-1 ASSETS Private Purpose Trust Funds Cash and Cash Equivalents $ - $ Due from Other Funds Restricted Assets Agency Funds 28, Total Assets 560 $ 28,545 LIABILITIES Due to Student Groups - $ 28,545 Total Liabilities NET POSITION Restricted for Scholarships - $ 28, Total Net Position $ 560 The notes to the financial statements are an integral part of this statement. 36

41 STATEMENT OF CHANGES IN FIDUCIARY FUND NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED AUGUST 31, 2014 EXHIBIT E-2 Private Purpose Trust Funds ADDITIONS: Local and Intermediate Sources $ 1 Total Additions 1 Change in Net Position 1 Total Net Position - September 1 (Beginning) 559 Total Net Position - August 31 (Ending) $ 560 The notes to the financial statements are an integral part of this statement. 37

42 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2014 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Tornillo Independent School District (the "District") is a public educational agency operating under the applicable laws and regulations of the State of Texas. It is governed by a seven member Board of Trustees (the "Board") elected by registered voters of the District. The District prepares its basic financial statements in conformity with generally accepted accounting principles promulgated by the Governmental Accounting Standards Board and it complies with the requirements of the appropriate version of Texas Education Agency s Financial Accountability System Resource Guide (the "Resource Guide") and the requirements of contracts and grants of agencies from which it receives funds. A. Reporting Entity Because the Board of Trustees (the Board) is elected by the public; has the authority to make decisions, appoint administrators and managers, and significantly influence operations; and has the primary accountability for fiscal matters; the District is not included in any other governmental reporting entity as defined by the Governmental Accounting Standards Board ("GASB"). There are no component units included within the reporting entity. B. Government-Wide and Fund Financial Statements The Statement of Net Position and the Statement of Activities are government-wide financial statements. They report information on all of the District s nonfiduciary activities with most of the interfund activities removed. Governmental activities include programs supported primarily by taxes, state foundation funds, grants and other intergovernmental revenues. Business-type activities include operations that rely on, to a significant extent, fees and charges for support. In addition to assets, the statement of net financial position may report a separate section of deferred outflows of resources. This separate financial statement category represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until that time. In addition to liabilities, the statement of net financial position may report a separate section of deferred inflows of resources. This separate financial statement category represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The Statement of Activities demonstrates how other people or entities that participate in programs the District operates have shared in the payment of the direct costs. The Charges for Services column includes payments made by parties that purchase, use, or directly benefit from goods or services provided by a given function or segment of the District. Examples include teacher certification, staff development, media production, etc. The Grants and Contributions column includes amounts paid by organizations outside the District to help meet the operational or capital requirements of a given function. Examples include grants under the Elementary and Secondary Education Act. If a revenue is not a program revenue, it is a general revenue used to support all of the District s functions. I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (Continued) 38

43 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2014 Interfund activities between governmental funds and between governmental and proprietary funds appear as due to/due froms on the Governmental Fund Balance Sheet and Proprietary Fund Statement of Net Position and as other resources and other uses on the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Net Position. All interfund transactions between governmental funds are eliminated on the government-wide statements. Interfund activities between governmental funds and fiduciary funds remain as due to/due froms on the government-wide Statement of Net Position. The fund financial statements provide reports on the financial condition and results of operations for three fund categories - governmental, proprietary, and fiduciary. Since the resources in the fiduciary funds cannot be used for District operations, they are not included in the government-wide statements. The District considers some governmental funds as major and reports their financial condition and results of operations in a separate column. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. All other revenues and expenses are nonoperating. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements use the economic resources measurement focus and the accrual basis of accounting, as do the fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements use the current financial resources measurement focus and the modified accrual basis of accounting. With this measurement focus, only current assets, deferred outflows of resources, current liabilities, deferred inflows of resources, and fund balances are included on the balance sheet. Operating statements of these funds present net increases and decreases in current assets (i.e., revenues and other financing sources and expenditures and other financing uses). The modified accrual basis of accounting recognizes revenues in the accounting period in which they become both measurable and available, and it recognizes expenditures in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest and principal on long-term debt, which is recognized when due. The expenditures related to certain compensated absences and claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. The District considers all revenues, except for property tax revenue, available if they are collectible within one year after year end. (Continued) 39

44 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2014 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenues from local sources consist primarily of property taxes. Revenues received from the State are recognized under the susceptible-to-accrual concept. The District considers property tax revenue available if they expect the revenue to be collected within 60 days of the end of the fiscal year. Miscellaneous revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned, since they are both measurable and available. Unavailable revenue from property taxes arises only under modified accrual basis of accounting. The governmental funds report this unavailable revenue as deferred inflow of resources, which is recognized revenue in the period that the amounts become available. Grant funds are considered to be earned to the extent of expenditures made under the provisions of the grant. Accordingly when such funds are received, they are recorded as deferred revenues until related and authorized expenditures have been made. If balances have not been expended by the end of the project period, grantors sometimes require the District to refund all or part of the unused amount. The Proprietary Fund Types and Fiduciary Funds are accounted for on a flow of economic resources measurement focus and utilize the accrual basis of accounting. This basis of accounting recognizes revenues in the accounting period in which they are earned and become measurable and expenses in the accounting period in which they are incurred and become measurable. Within this measurement focus, assets, deferred outflows of resources, liabilities, and deferred inflows of resources associated with the operation of these funds are included on the fund Statement of Net Position. The fund equity is segregated into invested in capital assets net of related debt, restricted, and unrestricted. GASB Statement No. 65, Items Previously Reported as Assets and Liabilities ( GASB 65"), establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources and deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The District s Statement of Net Position as of August 31, 2014 is presented in accordance with the guidance provided in this Statement. See Note U, Prior Period Adjustments, for more information regarding implementation of this new pronouncement. D. Fund Accounting The District reports the following major governmental fund: 1. General Fund - The General Fund is the District s primary operating fund. It accounts for all financial resources except those required to be accounted for in another fund. (Continued) 40